March 8 – U.S. Reps. Keith Rothfus, R-Pa., and Jim Himes, D-Conn., reintroduced the Federal Savings Association Charter Flexibility Act, supported by the American Bankers Association. The ABA called the bill “the epitome of sensible regulatory relief,” and said it would give greater flexibility to institutions chartered under the Home Owners Loan Act.
According to the ABA, the legislation will allow a federal savings association to elect to function as, and be regulated like, a national bank without having to change charters or governance structure.
Under HOLA, mutual savings banks, cooperative banks and other similar institutions must undergo an expensive and time-consuming process to change charters in order to offer a broader range of services similar to a national bank. H.R. 1426 establishes a simple election process for such an institution to become a newly-created Covered Savings Association, and it includes important safeguards to prevent fire sales of assets and subsidiaries during the transition process while also preserving the ability of the Office of the Comptroller of the Currency to enforce the law and prevent evasion.
“This bill ensures that institutions that have played a vital role in their communities for generations will be able to grow and evolve to serve their customers for years to come,” said Rothfus. “Small business owners, entrepreneurs, and families rely on their services to conduct their everyday business, which is why this proposal has bipartisan support in both the House and Senate and the backing of the OCC.”
“Federal savings associations already play an integral role in helping many Americans buy their homes,” said Himes. “Allowing them to expand the way they serve their communities will give Americans the option of using an already trusted institution for commercial or consumer loans as well. By easing the process through which they can offer a broader array of services, this legislation will create value for families and businesses.”
Reps. Rothfus and Himes introduced identical legislation during the last Congress, which passed the Financial Services Committee by voice vote. Sens. Heidi Heitkamp, D-N.D., and Jerry Moran, R-Kan., also introduced this legislation in the Senate.
According to Robert Davis, ABA executive vice president, mortgage markets, financial management and public policy, the proposal is modeled on an approach championed by OCC Comptroller Tom Curry in his home state of Massachusetts during his tenure there as the commissioner of banking. The OCC regulates both national banks chartered under the National Bank Act and federal thrifts chartered under the Home Owners Loan Act, and thus has expertise in regulating both types of institutions, he noted
“ABA has long championed greater flexibility for HOLA chartered institutions to adapt their business models to changing demographics and changing needs in their communities,” said Davis. “Federal saving associations have a long, proud history of being responsive to their communities’ needs, and this legislation will help them to enhance and continue that record.
“With the introduction of these bills, both chambers now have the opportunity to consider this important legislation. ABA strongly supports this legislation, and we urge its swift enactment.”